Thursday, April 26, 2012

Station Trading 101: Getting Started

This is the beginning of a three part series on my particular variant of station trading. I've thought about writing about my trading practices for a while now. When the EON Isk Guide came out, I was disappointed because their rundown on trade involved actually moving around space, and that's not for me (trade-wise). I like station trading because it involves minimal effort and it keeps me with more than enough isk to fund pvp, skills, etc. To kick it off, Station Trading 101 will start with the basics of acquiring skills, attaining capital and understanding the basics.

The Skills
A quick and easy part of trade that is absolutely essential is the skill training. The first two you want to look at are Trade and Retail skills. These both allow more orders per level of the skill (+4/+8, respectively). If you find that these still aren't enough orders, look towards Wholesale and Tycoon, which give you +16/+32 per level. Personally, I have Trade IV, Retail V, and Wholesale IV, and that is more than enough for me at the moment (125 open orders).

The next two skills that I would also call essential are Accounting and Broker Relations. Accounting reduces the transaction tax for each order by 10% per level. Broker Relations drives down the costs associated with setting up a market order by 5% per level as well. As a general rule of thumb, taxes and fees come to about 3% of your market order total, so utilizing this skills will allow you to trade on razor thin margins, and as any trader knows, a couple percent here or there can go a long way over time.

Margin Trading is a skill that wouldn't technically qualify as must-have, but its very close. Marginal, you could say (I'm sorry, that's a horrendous pun). Each level cumulatively lowers the amount of isk you have to put on escrow for your orders by 25% per level. Going from level 1 --> 5, you have 75%, 56.25%, 42.19%, 31.64%, and 23.73%. What does this mean exactly? If you place a buy order for 100M isk, for example, with Margin Trading V, you only have to put down 23.73M isk when you place the order. The remaining 76M isk is covered when someone fills that order. This is a beautiful thing, especially for budding traders. Essentially, you can trade with money you don't have. Not all of your orders will fill at one time, so you can have the following situation: the combination of your stock and your buy orders actually exceeds your net assets and isk. It can be confusing, but it's an awesome skill once you've got it figured out.

The last set of skills that I have for trade are somewhat non-essential, but it depends on your intended trade style. Daytrading, Marketing, Procurement and Visibility all relate to your ability to trade remotely. If you intend to just have an alt sit in a station (like Jita 4-4), these won't be necessary. I'll cover these explicitly in Station Trading 103: Advanced Topics.

Attaining Capital & Understanding the Basics
You can't start your trading enterprises until you've got something to offer the seller. Honestly, you can start pretty small and still make it, but it'll be a tougher road to go down. Having more capital always affords you more opportunity. Missions, Incursions, Mining or otherwise are all suitable, but you need somewhere to start.

Down to the basics then? Its pretty simple actually. Let's look at Magnetic Field Stablizer II prices as an example. As you can see, I chose Dodixie for this example. We'll talk about location selection just after this. Looking at sell orders (Sellers), you see the lowest price in Dodixie is just under 1M isk, but on buy orders (Buyers), the highest bid is 772,310.65 isk. The basic principle of station trading is to get someone to sell to you at the buy price and resell at the higher sell price. Simple right?

On buy orders, any order that is green means it has range selected such that any seller in your station will fill that order if it is the highest available. Note: selling to buy orders always fills the highest available buy order that meets range requirements. So as a station trader, you have to beat out the bids that are in your range in order to get your items to resell.

The last thing I'll cover in Trading 101 is location. Location is everything, right business owners? For station trading, there's really only a few places you'll want to go, and those are the major trade hubs. There are a few tiers of trade hub. Tier 1: Jita, Jita, & Jita. There is no doubt that Jita is the economic hub of Eve. Here, orders will be updated more frequently, and margins may be smaller, but the turnover will be quicker (If these terms seem unfamiliar, see Station Trading 102 -- I'll get into it). Your Tier 2 hubs are Rens and Amarr. Tier 3 hubs are other systems such as Dodixie, Hek, Oursulaert, and miscellaneous mission hubs. Blake over at k162space wrote an awesome article about the importance of location. Its from 2010, but most of the information is still pretty spot on. Side note: I have no idea how or why I was able to recall a random blog post from a year and a half ago, but it happens.

That's the quick and dirty of station trading. In the next post, I'll cover item selection & some direct practices in the station trading game. This is the heart of what we're going after, so pay attention if I haven't lost you yet!